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Expert view: Does it really matter that Confirmation of Payee has been delayed?

The deadline for UK banks to implement Confirmation of Payee has been extended to March 2020 — Chris Stephens, head of banking at identity authentication firm Callsign, gives his verdict

Confirmation of Payee is designed to protect customers against payment fraud

Following the delay to Confirmation of Payee standards in the UK, Chris Stephens, head of banking solutions at identity authentication firm Callsign, gives his perspective on the scheme’s prospects for fighting payment fraud.

The Confirmation of Payee (CoP) scheme, a system that has been created to make sure that names match on transactions in order to reduce fraud, was scheduled to be introduced in the UK in July this year.

However, in August it was announced that its implementation will be pushed back until March 2020, sparking concerns that consumers will be exposed to scams until it is in place.

Reassuringly, the Payment Systems Regulator has stated that Barclays, HSBC, Lloyds, Royal Bank of Scotland, Nationwide Building Society and Santander — which combined are responsible for roughly nine out of ten bank transfers — must all have their CoP schemes in operation before the aforementioned deadline.

At the moment, banks don’t actually have the capability to check the name on the account that the money is being paid into.

With the introduction of CoP, financial institutions will have a means of providing end users of payment systems increased confidence that they will be sending their payments to the right individual.

Although there are many people within the industry worried about what the delay could mean for consumers, in terms of being exposed to fraudulent activity, there is also a cohort who question whether CoP will actually make a difference.

Confirmation of Payee scheme is no ‘silver bullet’ in the fight against bank fraud

So, will the introduction of CoP truly help to reduce the number of fraud cases, and can banks be implementing other security measures in the meantime to make sure their customers’ payments are safe and secure?

Criminals also constantly develop their scamming techniques to reflect changes to the latest regulation legislation.

To bypass CoP, it will be relatively easy for them to just create a new account in the victim’s name to gain additional reassurance that they are transferring their money to a legitimate account.

Another concern is that CoP will fuel consumer complacency, and that they will expect it to provide an additional ‘safety net’ for their banking activities.

And although it will absolutely help tackle the issue of authorised push payment (APP) fraud, it could also open up an opportunity for more complicated fraud resulting in scams that are less frequent but of a far higher value.

For CoP to be completely reliable, all UK banks must execute the control simultaneously.